All articles tagged with #property values
The commercial real estate sector is facing growing distress as office buildings, particularly in major cities like New York, are being sold at significantly lower prices due to the rise of hybrid work and higher costs. This trend is expected to worsen, potentially impacting property tax revenues and local businesses.
The US commercial real estate sector is facing significant challenges, including steeper interest payments, tighter bank lending, and declining asset values, with more than $900 billion in debt set to mature this year. These issues are spreading globally and could lead to a financial crisis. However, some investors see this as an opportunity to capitalize on bargain prices, with bold buyers planning to purchase commercial properties at significant discounts.
The Missouri Supreme Court has unanimously dismissed class-action lawsuits filed by property owners against Jackson County and Tyler Technologies. The lawsuits alleged that the county's actions resulted in unlawful increases to assessed property values and that the technology company violated its contractual obligations. The court ruled that the taxpayers failed to exhaust available administrative remedies before filing the suit and that Tyler Technologies did not owe a duty of care to taxpayers.
Commercial real estate values are expected to suffer a $480 billion decline next year, following a $590 billion loss in 2023, due to weak growth and high interest rates, according to a report by Capital Economics. The office sector is particularly distressed, facing both elevated interest rates and a structural change in how people work post-pandemic. Falling revenues and rising capitalization rates are predicted to lead to a 15% decline in office values from next year to 2025. The apartment sector also faces headwinds, with rental affordability still a concern and a wave of new apartments entering the market. However, the retail sector is expected to be a bright spot, with retail property predicted to post annual total returns close to 6%. The industrial sector is considered overvalued, and property values are expected to decline 20% peak to trough.
During his New York civil fraud trial, former President Donald Trump joked with courtroom sketch artist Isabelle Brourman that he needed to lose weight after seeing her drawing of him. Trump attended the eighth day of proceedings, listening to testimony from an accounting professor regarding the alleged scheme carried out by the Trump Organization to inflate property values. Trump's defense attorneys questioned their final witness, and he is scheduled to take the stand in his own defense on Monday.
Homeowners associations (HOAs) are becoming increasingly common in the US, with roughly 84% of newly built, single-family homes sold in 2022 belonging to HOAs. However, some homeowners are experiencing financial burdens and legal disputes with their HOAs. In one case, a couple in Georgia ended up paying over $12,000 in fines and garnished wages to their HOA, in addition to legal fees. While HOAs can help maintain property values and manage shared amenities, there is mixed data on their impact. Homeowners who have disputes with their HOAs often struggle to find help from official government channels, and change in HOA regulations typically happens at the grassroots level.
Documents presented in court reveal that executives at the Trump Organization considered adding a "presidential premium" to inflate the value of Donald Trump's properties during his presidency. The premium, which was not included in the final financial statements, could have added at least $140 million to Trump's net worth. The ongoing fraud trial, led by the New York Attorney General's office, alleges that Trump and his company fraudulently misrepresented asset values to obtain favorable business deals and boost Trump's net worth. Trump and his sons are expected to testify in the trial, which will determine if fraud was committed intentionally and may result in penalties such as fines and business restrictions.
The office real estate sector is facing significant challenges due to the shift towards remote work and a lack of liquidity in the marketplace. Office owners are uncertain if demand will return, leading to a "reset in value" and a focus on better buildings with amenities. Keystone, a commercial real estate firm, has been refinancing and exploring office to multifamily conversions to adapt to the changing market. However, affordable housing remains a challenge due to high construction costs, borrowing costs, and investor priorities. Mixed-use zoning and location play a crucial role in successful conversions, but zoning approval can be time-consuming. Despite the difficulties, Keystone has managed to work with lenders and navigate the current market conditions.
The Jackson County Legislature in Missouri passed a resolution requesting tax relief for property owners, but the resolution is unlikely to have any legal effect. The resolution, introduced by Legislator Manny Abarca IV, calls for the Board of Equalization to discard the 2023 property valuations and impose a cap of a 15% increase in property values. However, the Jackson County Assessment Director stated that she will not follow this recommendation, as state law requires property taxes to be based on valuation. Despite lacking legal force, Abarca believes it is important to make a statement and ensure that the voices of the people are heard. The legislature also considered a resolution to freeze property tax rates for seniors, but postponed any action on it. Many property owners have appealed their valuations, and the deadline for appeals has been extended due to the high volume.
The US commercial real estate market is facing a financial storm as the COVID-19 pandemic continues to impact rent collections and property values. With many businesses struggling to pay rent, landlords are facing increasing pressure to renegotiate leases or face vacancies. The situation is particularly dire for retail and hospitality properties, which have been hit hard by the pandemic.
Researchers from New York University and Columbia University have revised their estimate of the effect of remote work on office property values, suggesting a 44% decline in New York City office values by 2029 and a nationwide value destruction of $506 billion in just a three-year period from 2019 to 2022. Remote work has led to significant drops in lease revenue, occupancy, lease renewal rates, and market rents in the office sector within commercial real estate, affecting cash flow at a time when the Federal Reserve has aggressively raised interest rates. However, the effects are not uniform across the country or across properties, with higher quality buildings faring better.
Commercial real estate is facing a unique challenge as landlords are dealing with both a cyclical market downturn and secular changes in the way people work, live, and shop. The sudden increase in interest rates has caused property values to fall, while the rise of remote work and e-commerce is reducing demand for office and retail space.
According to a report by Redfin, home prices have decreased by 1.2% from 2022, marking the first annual decline since 2012. The report also noted that the housing market is shifting towards a more balanced market, with more homes available for sale and less competition among buyers.